The news that Social Security benefits
will likely be frozen next year
dismayed many older Americans, who said they feared that rising expenses for medication and other necessities would drive them into retirement poverty.

“A lot of them aren’t going to be able to survive,” Anne Gondek, a retiree in Chicopee, Mass., said Monday, after the federal program for the elderly and disabled projected that for the first time in 34 years, there would be no cost of living adjustment (COLA) in payments for the next two years.

The average monthly Social Security benefit for retirees is $1,153 this year; usually, it goes up in step with the rate of inflation. Increases have ranged this decade from 1.4 percent to a high this year of 5.8 percent.

But with the economy in a deep recession, there’s officially no inflation for the program to keep up with, said Dane Partridge, a management professor at the University of Southern Indiana in Evansville.

The problem is that senior citizens, who make up most of America’s 50 million Social Security recipients, pay a disproportionate amount of their income on health care — which isn’t reflected in the Consumer Price Index, the main measure of inflation that’s used to calculate the annual Social Security increase, Partridge said.

That means a freeze in Social Security payments will translate into a drop in real purchasing power for many seniors, said Jo Wiejahn, a senior citizen in South Bend, Ind.

“Any time the ... income stays the same but everything goes up from the groceries, car maintenance — everything — you are actually going backward,” Wiejahn said. “Even though I work, the fact that my Social Security is going to stay the same is tough, because that’s basically the money I depend on.”

Besides Medicare, “everything goes up” for older consumers, said Velma Edmonds, a retiree in Paducah, Ky. “Your insurance goes up, and of course you know how utility bills will probably be jumping and everything. ...

“I don’t know what we’ll do,” Edmonds said.

For some, monthly checks will shrink
The situation is worst for about 6 million retirees, whose Social Security checks will actually shrink, even though, officially speaking, benefits can’t legally be reduced.

Because premiums for the Medicare prescription drug program are expected to increase, checks for Americans who have their premiums deducted directly from their Social Security payments will actually be a little smaller.

For Americans on fixed incomes, which includes many retirees, that will be particularly tough, said Tricia Gorden, director of community resources at REAL Services, a nonprofit service agency for the elderly in South Bend.

“Those costs are all rising,” Gorden said. “Prescription costs are all rising, [along with the] cost of home health aides, and therefore their current fixed income isn’t meeting those needs.”

The historical average COLA bump, about 4.4 percent, may not sound like much, but “it helps, every year, to get that little increase,” Dewayne Franklin, a retiree who lives on a fixed income, said over lunch with his wife at the McCracken County Senior Citizens Center in Paducah.